House price rises exceed average earnings

Last month we reported that some parts of London had seen house prices rise by more than £500 a day on average, driven by a rush to complete transactions ahead of a 3% stamp duty hike on additional home purchases and increased interest from overseas buyers tempted by the weak pound. Price rises in Kensington & Chelsea slowed or even fell backwards in March, but some boroughs continued to see very strong gains, with the latest data showing homeowners in Lewisham and Hackney seeing daily house price rises of almost £400.

Since the turn of the year average price rises in Lewisham have risen by almost £300 more than the amount the average Londoner is paid for a day's work. Despite reports of a slow-down and ongoing buyer uncertainty ahead of the EU referendum vote, a flurry of sales activity in first three months of 2016 saw prices in some boroughs rise by up to £400 a day, with Lewisham (£385) and Hackney (£343) topping the list. Barking & Dagenham (£293), Hillingdon (£279) and Brent (£278) all surpassed daily rises of £250, while the only four London boroughs that saw daily increases lower than average London gross pay of £94 were Merton (£88), Hounslow (£82), Haringey (£63) and Bromley (£58). Guy Gittins, Executive Director at Chestertons, comments: "There's been a lot of negative talk of markets softening and prices set for serious falls, if not a full-on crash, but the doomsayers are conveniently overlooking really strong buyer demand in the first three months of this year. It's true that in central London these rises seem to have flattened off in the past few weeks, but those who are talking of a bubble or a crash should remember the basic principles of supply and demand.

"Put simply, there just aren't enough houses on the market to satisfy demand, and when you factor in the rush from landlords trying to beat the 1st April stamp duty surcharge on additional homes, these strong price rises in London since the turn of the year aren't all that surprising.

"Even before the extra stamp duty on second homes was introduced, we were seeing plenty of owner-occupiers in the market, with a 300 per cent increase in the number of buyers registering with certain Chestertons branches between January and February. While some were pushed aside to an extent in the buy-to-let stampede, you can appreciate with daily gains of this magnitude why the imperative to get on to or move up the property ladder in London is so strong," Gittins continues.

Graham Stubbs, Sales Manager in the Islington office of Chestertons, says: "Since before Christmas we have seen a steady stream of would-be purchasers, and it's been a real mix of first-time buyers, second-steppers, buy-to-let investors and people looking for a London pad as a second home or pied-à-terre.

"Take the amazing daily price rises experienced in Hackney, for instance – in London the general trend has been eastwards for some time, and within that people are keen to buy as close to established areas of value growth as they can," Stubbs adds. "Good transport links are also a strong pull factor, and with the extended Overground network in play across north-east London and the likely impact of Crossrail 2 as and when it arrives, savvy buyers know that values are only going to move one way," Stubbs concludes.

Since 2015, Chestertons offers clients access to a full range of services including residential sales and lettings, property and block management, professional valuations, investment, leasehold services, residential development consultancy and property refurbishment and sourcing. Chestertons has also been shortlisted as both UK Sales Agency and Letting Agent of the year in the 2016 RESI Awards.